Our investments are keeping our favourite restaurants alive

I am fascinated by the ways in which crowdfunding is reshaping how we organize our societies, in participatory ways, by giving so many more of us a chance to invest our money in activities we support. Like the restaurants we like. And it does seem to me that this kind of participatory financing being available to ordinary people makes quite a change from a very small number of people controlling most investment – it helps us rebuild our communities from the bottom up.

The Counter had a fascinating article recently about how restaurants are turning to crowdfunding. It started the article with the story of Neil Blazin, who runs a pizzeria called Driftwood Oven in Pittsburgh, and who decided late in 2020 to turn to his neighbourhood customers for financing. He had run a Kickstarter campaign before, in 2017, when he was opening the business. This time he turned to Honeycomb Credit, which he called a ‘grown-up’ version of crowdfunding, the story said.

“He promised to pay back his investors over five years, and to provide a return on their investment, at 8.5 percent annual interest. In less than two weeks, 70 people put their money where their stomachs are, and chipped in the maximum investment total of $150,000. Several more clamored, albeit unsuccessfully, to get in afterward. ‘It really brings a lot of joy to know that people who are continuing to buy pizza are investing,’ Blazin said. ‘it’s not just like buying stock in something nameless. You’ve actively made that choice to invest in the place that you live.’

I was so intrigued by this idea that I began to do some more research. And I learned that the number of restaurant crowdfunding projects on Kickstarter alone increased from 3,400 in mid-2019 to more than 3,800 in April 2021.

Photo by Suzy Hazelwood from Pexels

But the crowdfunding method that Blazin used is different from the one used by Kickstarter or GoFundMe. This one is called regulation or investment crowdfunding, which lets customers make financial returns on their investment, and it is becoming increasingly popular. In 2016, the first year it could be offered, 14 restaurants raised $2.8 million through such investment crowdfunding platforms, and by 2021, it had quintupled to 72, raising $13 million, with an average raise of $181,000, The Counter reported.

And as I discovered from Forbes, this is a new development. The Securities and Exchange Commission implemented regulation crowdfunding in May 2016, “effectively allowing ordinary investors to make investments in private companies for the first time since the Great Depression.” And restaurants are the third most popular kind of regulation crowdfunding investment.

There is a cap on how much individuals can invest and how much businesses can raise, and securities have to be bought online via funding portals or broker-dealers who are registered with the SEC, The Counter says.

But in many ways, it is about more than financing. “Restauranteurs like crowdfunding because their investors become marketers. Over 18,000 people have invested in restaurants via crowdfunding, an average of 214 investors per restaurant,” Forbes says. And as The Counter reports, people who invested in Blazin’s campaign were customers who like the restaurant and want to keep it in their neighbourhood. And, says Neiss of Crowdfund Capital Advisors, customers who love these restaurants didn’t want them to go under during the pandemic “and so have been the financiers of their comeback.”

Part of that is because restaurants are often social hubs and key parts of the community and for many crowdfund investors, community cohesion matters more than earning a return on their money. “You have a decent number of young professionals with some disposable income who desire to be generous, and this is a need that they can see themselves being excited about but also still potentially benefiting from, in perpetuating community and creating the kind of spaces that they’d like to be part of in,” Matthew Josefy, a professor of strategy and entrepreneurship at Indiana University who has researched crowdfunding, told the Counter. “A restaurant kind of is at that boundary of need and desire.” 

I was fascinated by the individual stories of restaurateurs that were told in The Counter story and on the Honeycomb website.

But this post wouldn’t be complete without a mention of another form of community support for restaurants that I’ve come across recently – Beetcoin and the Slow Money Institute.

“Beetcoin funds local non-profit groups that make 0% loans to small organic farms and local food businesses. As opposed to crowdfunding platforms that host individual transactions, this is a new kind of funding system—with emphasis on the word system.”

It works through SOIL groups – Slow Opportunities for Investing Locally – local non-profits that make 0% loans. There are four such groups in Colorado, one in Virginia, and new groups are in the pipeline around the US, along with emerging activities in Israel, China and Nigeria, Beetcoin says.

All of these Slow Money networks are pioneering local non-profit funding models and generating support for small organic farms and local food systems, says Beetcoin.


What if you could invest in your favorite local restaurant and actually make money in the process? The Counter, Jan. 20, 2022.

How it works – Beetcoin.

Startup Restauranteurs Find Willing Investors Via Crowdfunding. Forbes, Sep. 28, 2019.

How Does Crowdfunding a Restaurant Work? Toast.